Incumbents at the Gate

I was first introduced to Barbarians at the Gate by a tweet-or maybe a pod @santiagoroel was on-sometime in mid 2025. It's a story turned movie about outsiders (KKR) storming the citadel of American corporate power (RJR Nabisco), but that framing felt a bit misleading. The barbarians weren't anarchists with torches; they were the incumbents – the private-equity firms, investment banks, and executives fluent in the system – using its own tools to rearrange who sat where inside the fortress. The gate didn't fall - it was opened, politely, by people who already had the keys.

Crypto is starting to look uncomfortably similar.

What began as a narrative about besieging banks and payment networks is resolving into something different: the incumbents aren't being displaced. They're evolving, adopting or acquiring the shiny new financial system and its tools, domesticating it, and using it to reinforce their existing positions. The "revolution" is happening, just neatly inside the walls, with the benefits of distribution, brand recognition, and mountains of capital.

The Original Narrative

I've been around this industry long enough to remember the early hope that blockchain would disrupt and displace the old guard , “JP Morgan and banks are f****d”, “blockchains will disrupt Visas payment network”, “Western Union will be disrupted”, “Who needs Schwab, not your keys, not your crypto”. It's been some of the strongest narratives since the ICO boom, and nearly a decade later all of those companies seem just fine, without adopting crypto rails, yet.

For years, web3 startups raised venture funding pitching themselves as agile revolutionaries ready to topple slow-moving incumbents burdened by bureaucracy and legacy systems. That story sold well, raised billions, and fueled endless optimism.

But one thing always stood out to me: why couldn't those incumbents just bolt crypto features onto their existing products to supercharge them rather than getting disrupted? It's been something I’ve carried into investing when analyzing startups.

Don't get me wrong-there have been plenty of highly successful startups in crypto, and not all venture funding has gone astray. Some protocols have genuinely carved out defensible niches and I'm VERY bullish on the crypto startup future, lets make that clear. But the incumbents have been tinkering with this technology for years, and a few key areas have shown tangible benefits where they're now racing to adopt.

I’m not talking about corporations experimenting with NFTs like we saw in 2022, where brands slapped monkey JPEGs onto marketing campaigns or gave out POAPs for press coverage. This movement is primarily dominated by tokenized US dollars, payments, remittances, tokenized assets, and anything markets. These are areas where the short to medium term upside is real and the infrastructure capable of handling institutional needs is getting really good.

Since about mid 2025, the plot has flipped in a way that's both ironic and inevitable in favor of the incumbents.

Feature, Not Product

Here's the uncomfortable truth for many crypto startups: most of what they've built isn't a full product suite, it's a feature. Stablecoins, tokenized treasuries, faster settlement rails are all genuinely useful innovations. But they're also the kind of thing a well-resourced incumbent can bolt onto an existing platform in 18 months or less to supercharge their existing stack.

When you're a startup, your entire value proposition might be "we do cross-border payments 90% cheaper using stablecoins." When you're Western Union, you can just do things... And they see the opportunity. They already have 400,000+ physical locations, brand trust built over 175 years, regulatory licenses in 200 countries, and millions of customers who've never heard of a wallet address (and won't have to) but use the product monthly.

This is the distribution advantage that kills the "disruption" thesis. It's easier for an established player with millions of users, brand trust, and regulatory comfort to embed blockchain features than for a startup to acquire those users from scratch. The startup built the prototype; the incumbent brings the scale. The last factor is timing - can the incumbent adopt the technology fast enough before the startups come knocking at the door.

When incumbents move, they can also just acquire the competition outright. Why spend five years building something when you can buy the team that already figured it out? We've seen this playbook in web2 and web3 fintech broadly , PayPal buying Venmo, Stripe acquiring Bridge/Privvy, Robinhood acquiring Bitstamp. A harsh reality is that the most successful protocol teams might end up inside the company they were seeking to disrupt, not outside it.

The Adoption Wave Is Real

In 2025, the first real glimmers of incumbent adoption appeared at scale.

Robinhood expanded its crypto offerings aggressively across different markets. In the US, they added staking for Ethereum and Solana plus tokenized assets, making it easier for retail users to earn yield without leaving the app they already use for their brokerage account. In Europe, they went further, launching perps - a product US regulators still won't allow but that perp dex startups have offered for years. For retail users, this means accessing crypto products through an app they already have on their phone, with a company they already trust enough to hold their brokerage account. No new wallet, no seed phrase management, no gas fee anxiety. The regulatory patchwork means European customers get the full suite while US users get the compliant version, but both represent Robinhood meeting customers where they already are rather than forcing them into crypto-native platforms.

Morgan Stanley and JPMorgan Chase began offering crypto exposure and custody options to wealth management clients, of which I assume they will expand out to most clients eventually. These aren't experiments-they're responses to client demand, packaged in the familiar wrapper of a private banking relationship. One day we’ll look back and not think twice about most major financial institutions offering to custody crypto assets.

Visa launched USDC settlement in the United States over the Solana blockchain in December 2025, starting with partners like Cross River Bank and Lead Bank, with broader rollout planned through 2026. Twenty-four-seven institutional flows at a fraction of traditional costs. When Visa decides to settle in stablecoins, the question isn't whether this technology works-it's whether how others can compete with Visa using it.

Stripe: The Acquirer's Playbook

Stripe offers the clearest illustration of how incumbents can simply buy their way into crypto. In October 2024, Stripe acquired Bridge, a stablecoin infrastructure startup, for $1.1 billion - its largest acquisition to date.

Bridge had raised just $58 million and was valued at $200 million in its March 2024. Eight months later, Stripe paid 5x+ that valuation. The logic was simple: Stripe processes millions of cross-border transactions daily, a segment growing 50% annually.

Bridge had already built the stablecoin infrastructure to make those flows faster and cheaper. Why spend years building when you can buy the team that has it built out? At the time a $1.1 billion acquisition seemed massive.

Then Stripe did it again. In June 2025, they acquired Privy, a wallet onboarding service supporting over 75 million wallets across 1,000 applications.

Privy's customers include Hyperliquid, Blackbird, and Farcaster - meaning the infrastructure layer powering a huge swath of crypto apps now belongs to a payments incumbent. Patrick Collison called stablecoins "room-temperature superconductors for financial services," and Stripe isn't waiting for the ecosystem to mature on its own terms. They're buying the best infrastructure, integrating it into a platform processing over $1 trillion annually, and making crypto a feature for their existing merchants. The startups got solid exits. The revolution they represented? Absorbed into the incumbent stack, one acquisition at a time.

BlackRock's BUIDL: Tokenization Goes Mainstream

BlackRock's BUIDL fund has been a darling for institutional tokenization.

Startups pioneered real-world asset (RWA) platforms, tokenizing treasuries and money markets to bring yield on-chain. This was genuinely innovative work-figuring out the legal structures, building the smart contracts, navigating the regulatory gray zones. Protocols like Centrifuge, Maple, and Ondo demonstrated that tokenized assets could work.

Then BlackRock stepped in.

The BUIDL fund hit over $1 billion in AUM by early 2025 and continued growing, peaking around $2.85 billion in November of 2025. It lets institutions access tokenized treasury yield through familiar channels rather than onboarding to less known protocols. Same underlying innovation, but wrapped in the world's largest asset manager, with existing relationships to every institutional allocator that matters.

For a pension fund or endowment considering tokenized treasuries, the choice isn't really a choice. Do you go with a newer DeFi protocol that requires wallet management, new operational procedures, and explaining to your board what "on-chain" means? Or do you call your BlackRock rep and add it to your existing account?

The startups built the prototypes and then BlackRock made it boring , which is exactly what institutions want. Boring and relatable.

Western Union: Neo-Remittances

We've seen the large remittance incumbents mostly sit on the sidelines over the past few years, but in 2025 Western Union officially dove into using crypto rails. The 175-year-old remittance powerhouse announced its USDPT stablecoin on Solana in late 2025, issued by Anchorage Digital and set for launch in the first half of 2026.

Following that Western Union announced a partnership with Rain in November 2025 to join its Digital Asset Network, allowing users to convert stablecoins from Rain-powered wallets into cash at Western Union locations. The following month, Western Union's CFO revealed they're developing a "stable card". A dollar-denominated prepaid card targeting high-inflation markets which could leverage Rain's infrastructure.

Startups had long targeted remittances with promises of cheaper, faster cross-border transfers via crypto rails. Its actually the first line in the BTC white paper.

The legacy remittance industry charged usurious fees on people who could least afford them, while hop, skip, and jumping through a myriad of intermediaries. A worker sending money home to family in Mexico or the Philippines might lose 5-10% to fees, then wait days for the transfer to clear.

Crypto startups saw this inefficiency and attacked it. Build on various blockchains to cut those fees to nearly zero. If you wanted to, you could send millions in USDC across the globe for less than a penny using Solana or other low cost chains.

The biggest problem for a while has been the last-mile cash-out. Most remittance recipients don't want USDC in a wallet; they want pesos in their hand, today, at the corner store. Crypto startups had to build out agent networks from scratch, navigate local regulations country by country, and somehow convince people to trust a brand they'd never heard of.

Western Union already has this. Hundreds of thousands of physical locations globally, established agent relationships, regulatory licenses everywhere that matters. And here's the thing most crypto natives underestimate: people value trust over almost everything else when it comes to managing their money. It's why the average person uses the same bank for over a decade even when the services are subpar-they trust it. When Western Union adds a stablecoin button to its app and cuts fees by 90%+, a lot of remittance startups' core value proposition becomes a tough sell. Same speed, same low fees, but with the trust and cash-out network that took a century to build.

That said, this is one category where startups could still carve out niche sectors and be highly successful. Competitors like DollarApp and other localized players have been gaining ground, and it's not a foregone conclusion that Western Union captures the entire market, they’re playing from behind the ball right now and haven't been known to quickly innovate.

The question is whether leadership can turn the cruise ship fast enough. Time will tell.

What Startups Still Have Going For Them

Look, I’m in the business of spotting startups in crypto before they become a big thing, so I want to end by saying I believe there is still room for plenty of highly successful startups in this space. This isn't a complete wipeout narrative. Some crypto startups will thrive, particularly in areas where incumbents either can't compete, won't compete due to various constraints, or encounter innovators dilemma and ignore the disruptive components of what blockchain technology has to offer.

Incumbents move slowly by design. Compliance reviews, board approvals, risk committees , all necessary for managing trillion-dollar balance sheets, but all friction against rapid iteration and innovation adoption. Startups can ship features in weeks that would take JPMorgan a year to approve. In fast-moving subsegments of the market, that speed still matters. I think this is where acquisitions become really interesting, especially anything that is effectively a better version of tradfi on-chain. The thing about that is there will be very few winners.

Composability and DeFi: The ability to snap together protocols like Lego blocks-using Aave as collateral for Maker which feeds into Yearn-creates possibilities that siloed incumbent products can't easily replicate. There's real value in open, permissionless infrastructure, even if most users never touch it directly. Banks and big institutions will require KYC and various compliance measures that some users may not want to use. These are corners of the market where nimble startups can scale growth.

Market creation / Net new products: Theres still some areas that are unknown unknowns. This is one sector where crypto companies still have a large opportunity to use permissionless trust minimized ledgers to scale a product to the masses, especially as the tech becomes more democratized.

The long tail: Not every market is worth an incumbent's attention. Small niches, emerging markets, experimental use cases , these might be too small for a Western Union to care about but big enough to build a real business. Some of the most successful crypto companies will win by serving markets the giants ignore.

But in core financial plumbing , stablecoins, settlement, tokenized securities, and custody, the incumbents have structural advantages that are hard to overcome. Distribution and brand recognition/trust trumps pure tech.

The Acquisition Play

There's another way this plays out that founders should be watching: acquisition. We’re back in a M&A friendly regime and we’ve already seen a number of high profile acquisitions , expect that trend to continue.

When an incumbent decides to move into a space, they can build, partner, or buy. Building is slow. Partnering is complicated. Buying is clean , you get the tech, the team, and (sometimes) the regulatory approvals in one transaction.

The most successful crypto startups might find their exit isn't an IPO or a token pump, and that it's a strategic acquisition by exactly the kind of incumbent they set out to disrupt. Stripe buying Bridge for $1.1 billion in 2024 was an early signal. PayPal acquiring various crypto infrastructure plays, Visa's interest in stablecoin settlement partners, banks looking for custody technology. This all of this points to a future where "winning" as a crypto startup could mean getting absorbed.

This isn't necessarily bad for founders or investors. A $500M acquisition is a fantastic outcome. But it does change the narrative. The incumbents don't storm the gates, they pay their way inside and then ask nicely, contractually for you to leave their new castle.

The Question That Remains

The blockchain revolution is succeeding, but not as the outsider uprising many expected. Instead, it looks like Western Union but 90%+ reduction in fees, JPMorgan but 24/7 trading and execution, BlackRock but better yields and compostability on-chain.

The technology won. The specific vision of who would wield it is what changed.

In the long run, the better distribution network wins , and right now, the incumbents are at the gate, not just knocking, but opening the door with keys. Startups may still thrive in truly decentralized niches, where the whole point is operating outside the system. Privacy tools, censorship-resistant applications, permissionless infrastructure for people who actually want or need it permissionless.

But in core financial plumbing, where incumbents recognize the massive visible opportunity (e.g. stablecoins) they don’t just wait for their impending apocalypse. Prepared incumbents don’t get disrupted, the old guard evolves and adapts, embracing the disruption and making it a feature in their existing product suite.

The question isn't whether blockchain wins , it's whose version of winning we end up with.

h/t

@masonnystrom @GSkrovina for the feedback and friendship